Sas Institute Inc. v. Iancu

ON WRIT
OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
FEDERAL CIRCUIT

Inter
partes review allows private parties to challenge previously
issued patent claims in an adversarial process before the
Patent Office. At the outset, a party must file a petition to
institute review, 35 U.S.C. §311(a), that identifies the
challenged claims and the grounds for challenge with
particularity, §312(a)(3). The patent owner, in turn,
may file a response. §313. If the Director of the Patent
Office determines "there is a reasonable likelihood that
the petitioner would prevail with respect to at least 1 of
the claims challenged in the petition, " §314(a),
he decides "whether to institute . . . review . . .
pursuant to [the] petition, " §314(b). "If . .
. review is instituted and not dismissed, " at the end
of the litigation the Patent Trial and Appeal Board
"shall issue a final written decision with respect to
the patentability of any patent claim challenged by the
petitioner." §318(a).

Petitioner
SAS sought review of respondent Complement Soft's
software patent, alleging that all 16 of the patent's
claims were unpatentable. Relying on a Patent Office
regulation recognizing a power of "partial institution,
" 37 CFR §42.108(a), the Director instituted review
on some of the claims and denied review on the rest. The
Board's final decision addressed only the claims on which
the Director had instituted review. On appeal, the Federal
Circuit rejected SAS's argument that §318(a)
required the Board to decide the patentability of every claim
challenged in the petition.

Held:

When the Patent Office institutes an inter partes review, it
must decide the patentability of all of the claims the
petitioner has challenged. The plain text of §318(a)
resolves this case. Its directive is both mandatory and
comprehensive. The word "shall" generally imposes a
nondiscretionary duty, and the word "any"
ordinarily implies every member of a group. Thus,
§318(a) means that the Board must address
every claim the petitioner has challenged. The
Director's "partial institution" power appears
nowhere in the statutory text. And both text and context
strongly counsel against inferring such a power.

The statute envisions an inter partes review guided by the
initial petition. See §312(a)(3). Congress structured
the process such that the petitioner, not the Director,
defines the proceeding's contours. The ex parte
reexamination statute shows that Congress knew exactly how to
authorize the Director to investigate patentability questions
"[o]n his own initiative, and at any time, "
§303(a). The inter partes review statute indicates that
the Director's decision "whether" to institute
review "pursuant to [the] petition" is a yes-or-no
choice. §314(b).

Section 314(a)'s requirement that the Director find
"a reasonable likelihood" that the petitioner will
prevail on "at least 1 of the claims challenged in the
petition" suggests, if anything, a regime where a
reasonable prospect of success on a single claim justifies
review of them all. Again, if Congress had wanted to adopt
the Director's claim-by-claim approach, it knew how to do
so. See §304. Nor does it follow that, because
§314(a) invests the Director with discretion on the
question whether to institute review, it also
invests him with discretion regarding what claims
that review will encompass. The rest of the statute confirms,
too, that the petitioner's petition, not the
Director's discretion, should guide the life of the
litigation. See, e.g., §316(a)(8).

The Director suggests that a textual discrepancy between
§314(a)- which addresses whether to institute review
based on claims found "in the petition"-and
§318(a)-which addresses the Board's final resolution
of the claims challenged "by the petitioner"-means
that the Director enjoys the power to institute a review
covering fewer than all of the claims challenged in the
petition. However, the statute's winnowing
mechanism-which allows a patent owner to concede one part of
a petitioner's challenge and "[c]ancel any
challenged patent claim, " §316(d)(1)(A)-fully
explains why Congress adopted the slightly different
language.

The Director's policy argument-that partial institution
is efficient because it permits the Board to focus on the
most promising challenges and avoid spending time and
resources on others-is properly addressed to Congress, not
this Court. And the Director's asserted "partial
institution" power, which is wholly unmentioned in the
statute, is not entitled to deference under Chevron U.S.
A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837. Finally, notwithstanding §314(d)-which makes
the Director's determination whether to institute an
inter partes review "final and
nonappealable"-judicial review remains available
consistent with the Administrative Procedure Act to ensure
that the Patent Office does not exceed its statutory bounds.
Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. ___,
distinguished. Pp. 4-14.

A few
years ago Congress created "inter partes review."
The new procedure allows private parties to challenge
previously issued patent claims in an adversarial process
before the Patent Office that mimics civil litigation.
Recently, the Court upheld the inter partes review statute
against a constitutional challenge. Oil States Energy
Services, LLC v. Greene's Energy Group, LLC, ante,
p.. Now we take up a question concerning the statute's
operation. When the Patent Office initiates an inter partes
review, must it resolve all of the claims in the
case, or may it choose to limit its review to only
some of them? The statute, we find, supplies a clear
answer: the Patent Office must "issue a final written
decision with respect to the patentability of any
patent claim challenged by the petitioner." 35 U.S.C.
§318(a) (emphasis added). In this context, as in so many
others, "any" means "every." The agency
cannot curate the claims at issue but must decide them all.

"To
promote the Progress of Science and useful Arts, "
Congress long ago created a patent system granting inventors
rights over the manufacture, sale, and use of their
inventions. U.S. Const., Art. I, §8, cl. 8; see 35
U.S.C. § 154(a)(1). To win a patent, an applicant must
(among other things) file "claims" that describe
the invention and establish to the satisfaction of the Patent
Office the invention's novelty and nonobviousness. See
§§102, 103, 112(b), 131; Cuozzo Speed
Technologies, LLC v. Lee, 579 U.S. ___.___-___ (2016)
(slip op., at 2-3).

Sometimes,
though, bad patents slip through. Maybe the invention
wasn't novel, or maybe it was obvious all along, and the
patent owner shouldn't enjoy the special privileges it
has received. To remedy these sorts of problems, Congress has
long permitted parties to challenge the validity of patent
claims in federal court. See §§282(b)(2)-(3). More
recently, Congress has supplemented litigation with various
administrative remedies. The first of these was exparte
reexamination. Anyone, including the Director of the Patent
Office, can seek ex parte reexamination of a patent claim.
§§302, 303(a). Once instituted, though, an exparte
reexamination follows essentially the same inquisitorial
process between patent owner and examiner as the initial
Patent Office examination. §305. Later, Congress
supplemented exparte reexamination with inter partes
reexamination. Inter partes reexamination (since repealed)
provided a slightly more adversarial process, allowing a
third party challenger to submit comments throughout the
proceeding. §314(b)(2) (2006 ed.) (repealed). But
otherwise it too followed a more or less inquisitorial course
led by the Patent Office. §314(a). Apparently
unsatisfied with this approach, in 2011 Congress repealed
inter partes reexamination and replaced it with inter partes
review. See 35 U.S.C. §§311-319 (2012 ed.).

The new
inter partes review regime looks a good deal more like civil
litigation. At its outset, a party must file "a petition
to institute an inter partes review of [a] patent."
§311(a). The petition "may request to cancel as
unpatentable 1 or more claims of [the] patent" on the
ground that the claims are obvious or not novel.
§311(b); see §§102 and 103. In doing so, the
petition must identify "each claim challenged, "
the grounds for the challenge, and the evidence supporting
the challenge. §312(a)(3). The patent owner, in turn,
may respond with "a preliminary response to the
petition" explaining "why no inter partes review
should be instituted." §313. With the parties'
submissions before him, the Director then decides
"whether to institute an inter partes review . . .
pursuant to [the] petition." §314(b). (In practice,
the agency's Patent Trial and Appeal Board exercises this
authority on behalf of the Director, see 37 CFR §42.4(a)
(2017).) Before instituting review, the Director must
determine, based on the parties' papers, "that there
is a reasonable likelihood that the petitioner would prevail
with respect to at least 1 of the claims challenged in the
petition." 35 U.S.C. §314(a).

Once
the Director institutes an inter partes review, the matter
proceeds before the Board with many of the usual trappings of
litigation. The parties conduct discovery and join issue in
briefing and at an oral hearing. §§316(a)(5), (6),
(8), (10), (13). During the course of the case, the patent
owner may seek to amend its patent or to cancel one or more
of its claims. §316(d). The parties may also settle
their differences and seek to end the review. §317. But
"[i]f an inter partes review is instituted and not
dismissed, " at the end of the litigation the Board
"shall issue a final written decision with respect to
the patentability of any patent claim challenged by the
petitioner." §318(a).

Our
case arose when SAS sought an inter partes review of
Complement Soft's software patent. In its petition, SAS
alleged that all 16 of the patent's claims were
unpatentable for various reasons. The Director (in truth the
Board acting on the Director's behalf) concluded that SAS
was likely to succeed with respect to at least one of the
claims and that an inter partes review was therefore
warranted. But instead of instituting review on all of the
claims challenged in the petition, the Director instituted
review on only some (claims 1 and 3-10) and denied review on
the rest. The Director did all this on the strength of a
Patent Office regulation that purported to recognize a power
of "partial institution, " claiming that
"[w]hen instituting inter partes review, the
[Director] may authorize the review to proceed on all or some
of the challenged claims and on all or some or the grounds of
unpatentability asserted for each claim." 37 CFR
§42.108(a). At the end of litigation, the Board issued a
final written decision finding claims 1, 3, and 5-10 to be
unpatentable while upholding claim 4. But the Board's
decision did not address the remaining claims on which the
Director had refused review.

That
last fact led SAS to seek review in the Federal Circuit.
There SAS argued that 35 U.S.C. §318(a) required the
Board to decide the patentability of every claim SAS
challenged in its petition, not just some. For its part, the
Federal Circuit rejected SAS's argument over a vigorous
dissent by Judge Newman. SAS Institute, Inc. v.
Complement Soft, LLC,825 F.3d 1341 (2016). We granted
certiorari to decide the question ourselves. 581 U.S. (2017).

We find
that the plain text of §318(a) supplies a ready answer.
It directs that "[i]f an inter partes review is
instituted and not dismissed under this chapter, the [Board]
shall issue a final written decision with respect to
the patentability of any patent claim challenged by the
petitioner . . . ." §318(a) (emphasis added).
This directive is both mandatory and comprehensive. The word
"shall" generally imposes a nondiscretionary duty.
See Lexecon Inc. v. Milberg Weiss Bershad Hynes &
Lerach,523 U.S. 26, 35 (1998). And the word
"any" naturally carries "an expansive
meaning." United States v. Gonzales, 520 U.S.
1, 5 (1997). When used (as here) with a "singular noun
in affirmative contexts, " the word "any"
ordinarily "refer[s] to a member of a particular group
or class without distinction or limitation" and in this
way "impl[ies] every member of the class or
group." Oxford English Dictionary (3d ed., Mar. 2016),
www.oed.com/view/Entry/8973 (OED) (emphasis added)
(all Internet materials as last visited Apr. 20, 2018). So
when §318(a) says the Board's final written decision
"shall" resolve the patentability of "any
patent claim challenged by the petitioner, " it means
the Board must address every claim the
petitioner has challenged.

That
would seem to make this an easy case. Where a statute's
language carries a plain meaning, the duty of an
administrative agency is to follow its commands as written,
not to supplant those commands with others it may prefer.
Social Security Bd. v. Nierotko,327 U.S. 358, 369
(1946). Because SAS challenged all 16 claims of
ComplementSoft's patent, the Board in its final written
decision had to address the patentability of all 16 claims.
Much as in the civil litigation system it mimics, in an inter
partes review the petitioner is master of its complaint and
normally entitled to judgment on all of the claims it raises,
not just those the decisionmaker might wish to address.

The
Director replies that things are not quite as simple as they
seem. Maybe the Board has to decide every claim challenged by
the petitioner in an inter partes review. But, he says, that
doesn't mean every challenged claim gains admission to
the review process. In the Director's view, he retains
discretion to decide which claims make it into an inter
partes review and which don't. The trouble is, nothing in
the statute says anything like that. The Director's
claimed "partial institution" power appears nowhere
in the text of §318, or ...

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